GAO says IRS performance varies on website, other areas

A recent Government Accountability Office report said the Internal Revenue Service has "fluctuations” in performance in areas that include electronic returns, telephone service and the IRS website.

The GAO's performance audit was done from Feb. 2010 to Dec. 2010 and measured the IRS' 2010 performance benchmarks with service-stated goals and previous performances.

The GAO found that electronic filing was up three percent from 2009 and is now 71 percent of total tax filings. The IRS processed 97 million electronic filings against 40 million through paper. Electronic filing costs the service 19 cents while the average cost to process a paper filing was $3.29. With five million less paper files than in 2009 and three million more electronic files in 2010, the IRS saved approximately $26.32 million in processing costs, the GAO said.

The agency processes filings with the Customer Account Data Engine (CADE) along with a legacy system named Individual Master File. CADE processed about 41 million returns in 2010 and processes returns on average one to eight days faster than the legacy system. The IRS plans on integrating a newer version – CADE 2 – into the system in 2012.

The filing system at the agency is in transition as it moves away from the traditional e-file to Modernized e-File (MeF). The MeF system faced stability and usability problems and the GAO said it was overall “underutilized.” The IRS expects this year that the MeF system will be able to process 85 million individual returns.

The IRS saw its second-biggest year ever in 2010 with 239 million visits, up from 235 million in 2009 but down from 292 million in 2008. It processed 157 million downloads and 277 million search queries.

The GAO said management guidance is especially important for the IRS because 73 percent of people who visited the service's website said they found the information they were looking for, a five percent decrease from 2007. A new website is in the works for the IRS as the agency is slotting $320 million over 10 years to introduce a new filing system by the 2013 tax filing season. The $320 million is slotted to “Web operations, including a website help desk, development of interactive Web applications, and program management of IRS’s website and registered user and employee sites,” according to the GAO.

Telephone and walk-in services also had problems, the GAO said, but that accuracy at walk-in sites had been improved. This is attributed to the Interactive Tax Law Assistant that guides IRS associates through a series of questions to properly answer a customer’s questions. However, the service is having trouble with its debit card program that provides refunds to people who may not have bank or other financial institutions accounts. The GAO said the service hasn't had enough stakeholder input in the program and could do a better job communicating with customers and making the program more widely known and efficient.

The GAO said the IRS telephone system, for the most part, beat its goals for the 2010 season. Callers seeking live assistance in 2010 got the answers they were looking for 76 percent of the time, better than the stated goal of 71 percent. The wait time before speaking with a customer service representative also was better than expectations at 9.5 minutes, better than the goal of 11.6.

The IRS needs to institute timeliness correspondence goals and overall improve the system, the report states. The agency received 77 million calls in the 2010 tax season, of which 32 million were automated calls answered, 24 million were assisted with having their calls answered, 21 million people abandoned their calls and one million IRS busy signals or disconnects. In addition, the service does not have a method for reviewing quality customer service which may have led to the decrease in customers questions answered between 2008 and 2010.

Most of the GAO recommendations had to do with the telephone system. In addition to creating a customer-service standard the GAO said it would like to see the IRS store phone calls longer than 45 days for data analysis purposes and institute team meetings with frontline telephone operators to determine call trends. Other recommendations included establishing a performance measure for taxpayer correspondence that includes providing timely service to taxpayers and figuring out a plan for the debit card program.

Steven Miller, the IRS' deputy commissioner for services and enforcement, agreed with two of the recommendations including the meetings with frontline telephone operators. Miller did not express agreement with the GAO over the debit card program but outlined how the IRS is going to re-evaluate the program.

Miller disagreed with two of recommendations, both concerning the telephone system. Miller "does not believe that IRS needs to revise its current process to measure telephone service at this time as it currently develops its telephone plans after consideration of many factors," according to the report. Factors include historical call demand and type and length of calls. Miller also disagreed with need to store calls for more than 45 days for analysis purposed as he does not think it would be a low-cost effort.

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